| Summary of Significant Accounting Policies | 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Use of Estimates The preparation of the consolidated financial statements
in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues
and expenses during the reporting periods. Management makes these estimates using the best information available at the time the estimates
are made; however actual results could differ materially from those estimates. Cash and Cash Equivalents Cash and cash equivalents are carried at cost and
represent cash on hand, demand deposits placed with banks or other financial institutions and all highly liquid investments with an original
maturity of three months or less as of the purchase date of such investments. The Chinese Renminbi is not freely convertible into foreign
currencies. Under the PRC Foreign Exchange Control Regulations and Administration of Settlement, Sales and Payment of Foreign Exchange
Regulations, the Company is permitted to exchange Chinese Renminbi for foreign currencies through banks that are authorized to conduct
foreign exchange business. Accounts Receivable Financial instruments that potentially subject the
Company to concentrations of credit risk consist primarily of accounts receivable. The Company extends credit to its customers in the
normal course of business and generally does not require collateral. The Company’s credit terms are dependent upon the segment,
and the customer. The Company assesses the probability of collection from each customer at the outset of the arrangement based on a number
of factors, including the customer’s payment history and its current creditworthiness. If in management’s judgment collection
is not probable, the Company does not record revenue until the uncertainty is removed. Management performs ongoing credit evaluations, and
the Company maintains an allowance for potential credit losses based upon its loss history and its aging analysis. The allowance for doubtful
accounts is the Company’s best estimate of the amount of credit losses in existing accounts receivable. Management reviews the allowance
for doubtful accounts each reporting period based on a detailed analysis of trade receivables. In the analysis, management primarily considers
the age of the customer’s receivable, and also considers the creditworthiness of the customer, the economic conditions of the customer’s
industry, general economic conditions and trends, and the business relationship and history with its customers, among other factors. If
any of these factors change, the Company may also change its original estimates, which could impact the level of the Company’s future
allowance for doubtful accounts. If judgments regarding the collectability of receivables were incorrect, adjustments to the allowance
may be required, which would reduce profitability. Accounts receivable are recognized and carried at
the original invoice amount less an allowance for any uncollectible amounts. An estimate for doubtful accounts receivable is made when
collection of the full amount is no longer probable. Bad debts are written off as identified. No allowance for doubtful accounts was made
for the year ended December 31, 2020. Revenue Recognition Revenue is generated through sale of goods, consultancy,
integration and installation services. Revenue is recognized when a customer obtains control of promised goods or services and is recognized
in an amount that reflects the consideration that the Company expects to receive in exchange for those goods or services. In addition,
the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with
customers. The amount of revenue that is recorded reflects the consideration that the Company expects to receive in exchange for those
goods and services. The Company applies the following five-step model in order to determine this amount: (i) identification of the promised goods
and services in the contract; (ii) determination of whether the promised
goods and services are performance obligations, including whether they are distinct in the context of the contract; (iii) measurement of the transaction price,
including the constraint on variable consideration; (iv) allocation of the transaction price
to the performance obligations; and (v) recognition of revenue when (or as)
the Company satisfies each performance obligation. The Company adopted ASU 2014-09, Revenue from Contracts
with Customers (Topic 606). Under Topic 606, the Company records revenue when persuasive evidence of an arrangement exists, delivery has
occurred, the fee is fixed or determinable and collectability is probable. The Company records revenue from the sale of product upon shipment
or delivery of the products to the customer. The Company allows for 12-month warranties to be purchased on the products. Our warranty
includes the repair works for the unfunctional products, and the costs of the spare parts are not included in our warranty. In management’s
opinion, there is no provision made for warranty provided. The revenue that generated through sale of goods are
$519,834. Revenue generated through consultancy, integration and installation services is $32,944, respectively. Shipping and handling costs Costs for shipping and handling activities, including
those activities that occur subsequent to transfer of control to the customer, are recorded as cost of sales and are expensed as incurred.
The Company accrues costs for shipping and handling activities that occur after control of the promised good has transferred to the customer. Earnings Per Share The Company reports earnings per share in accordance
with ASC 260 “ Earnings Per Share The Company’s basic earnings per share is computed
by dividing the net income available to holders by the weighted average number of the Company’s ordinary shares outstanding. Diluted
earnings per share reflects the amount of net income available to each ordinary share outstanding during the period plus the number of
additional shares that would have been outstanding if potentially dilutive securities had been issued. Related parties Parties, which can be a corporation or individual,
are considered to be related if the Company has the ability, directly or indirectly, to control the other party or exercise significant
influence over the other party in making financial and operating decisions. Companies are also considered to be related if they are subject
to common control or common significant influence. Income Taxes The Company accounts for income taxes using the asset
and liability method prescribed by ASC 740 “ Income Taxes New U.S. federal tax legislation, commonly referred
to as the Tax Cuts and Jobs Act (the “ U.S. Tax Reform Foreign Currency Translation Transactions denominated in currencies other than
the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transaction.
Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency
using the applicable exchange rates at the balance sheet dates. The resulting exchange differences are recorded in the statements of operations. The reporting currency of the Company is United States
Dollars (“US$”). The Company’s subsidiary in Seychelles, Hong Kong and PRC maintains its books and record in United
States Dollars (“US$”), Hong Kong Dollars (“HK$”) and Chinese Renminbi (“CNY¥”) respectively. In general, for consolidation purposes, assets and
liabilities of its subsidiary whose functional currency is not the US$ are translated into US$, in accordance with ASC Topic 830-30, “Translation
of Financial Statement”, using the exchange rate on the balance sheet date. Revenues and expenses are translated at average rates
prevailing during the period. The gains and losses resulting from translation of financial statements of foreign subsidiary are recorded
as a separate component of accumulated other comprehensive income within the statement of stockholders’ equity. Translation of amounts from the local currencies of
the Company into US$ has been made at the following exchange rates for the respective periods:
As of and for the
December 31, 2020
Period-end HK$ : US$1 exchange rate 7.75
Period-average HK$ : US$1 exchange rate 7.75
Period-end CNY¥ : US$1 exchange rate 6.53
Period-average CNY¥ : US$1 exchange rate 6.89 Fair Value Measurement Accounting Standards Codification (“ ASC Fair Value Measurements and Disclosures This ASC establishes a fair value hierarchy that prioritizes
the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in
active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).
The three levels of the fair value hierarchy are described below: Level 1: Unadjusted quoted prices in active markets
that are accessible at the measurement date for identical, unrestricted assets or liabilities; Level 2: Quoted prices in markets that are not active,
or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability; and Level 3: Prices or valuation techniques that require
inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity). Recently issued and adopted accounting pronouncements In February 2016, the Financial Accounting Standards
Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02, Leases (Topic 842). Under the new guidance,
lessees will be required recognize the following for all leases (with the exception of short-term leases) at the commencement date: 1)
A lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and
2) A right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for
the lease term. The new lease guidance simplified the accounting for sale and leaseback transactions primarily because lessees must recognize
lease assets and lease liabilities. Lessees will no longer be provided with a source of off-balance sheet financing. The amendments in
this ASU are effective for fiscal years beginning after December 15, 2018, including interim periods within those years. This standard
takes effect for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. According to this new
standard, the Company should record both right-of-use asset and lease liability of $75,658 on its consolidated financial statements for
the fiscal year ended December 31, 2020. In June 2016, the FASB issued ASU 2016-13, Measurement
of Credit Losses on Financial Instruments (Topic 326). ASU 2016-13 requires entities to use a forward-looking approach based on current
expected credit losses (“CECL”) to estimate credit losses on certain types of financial instruments, including trade receivables.
This may result in the earlier recognition of allowances for losses. ASU 2016-13 is effective for the Company beginning January 1, 2023,
and early adoption is permitted. The Company reviews new accounting standards as issued.
Management has not identified any other new standards that it believes will have a significant impact on the Company’s consolidated
financial statements. COVID-19 Uncertainty An outbreak of respiratory illness caused by the novel
coronavirus, commonly referred as “COVID-19” emerged in late 2019 and has spread globally. The COVID-19 is considered to be
highly contagious and poses a serious public health threat. The World Health Organization labeled the COVID-19 outbreak as a pandemic
on March 11, 2020, given its threat beyond a public health emergency of international concern the organization had declared on January
30, 2020. The epidemic has resulted in social-distancing restrictions,
travel restrictions, and the temporary closure of stores and facilities during the past few months. The negative impacts of the COVID-19
outbreak on our business may include, but not strictly be limited to:
- The uncertain economic conditions may refrain clients from engaging our services.
- The operations of businesses in most industries have been, and could continue to be, negatively impacted by the epidemic, which may in turn adversely impact their business performance. For the year ended December 31, 2020, our revenue
has been significantly decreased due to the impact of the COVID-19. We are unable to accurately predict the upcoming impact that the
COVID-19 will have due to various uncertainties, including the ultimate geographic spread of the virus, the severity of the disease,
the duration of the outbreak globally, and effectiveness of the actions that may be taken by governmental authorities. Additionally,
it is possible that we may face similar difficulties from future events, such as this, should there be at any point another global pandemic.
As of the current date, we do not believe that we have been directly impacted by Covid-19. However, economies throughout the world have
been impacted significantly in a vast number of ways, and we cannot state with any level of certainty to what extent we may have been
indirectly impacted by market conditions as a result of the pandemic and/or if the pandemic has forestalled, in any capacity, our growth
to date. |
